UK Service Economy Eases in December as Recovery Takes Hold: Markit
The UK service economy cooled for the second consecutive month in December, easing off the 16-year high enjoyed at the beginning of the fourth quarter. Growth remained strong, however, with confidence rising to the highest level since March 2010.
Markit Group’s gauge of UK service activity fell 1.2 percentage points to 58.8 in December. A median estimate of economists polled by Bloomberg called for 60.3. The 50.0 mark separates contraction from expansion.
Activity, new business and employment continued to expand at a rapid pace toward the end of the fourth quarter, reflecting the broader upturn in the UK economy. This in-turn fueled business expectations, with service providers reporting increased sales among new and existing customers. The growth in business activity is expected to continue in 2014, with optimism concerning future business conditions rising to the highest level in nearly four years.
Employment rose for the twelfth consecutive month to account for rising workloads. A brighter business outlook over the next 12 months bolstered hiring plans, as service providers continued to ramp-up at a historic pace.
“Service providers ended 2013 in a buoyant mood,” said Chris Williamson of Markit. “Although growth of business activity slowed, it’s come down from super-strong levels and the pace of expansion remains elevated.”
The combined pace of manufacturing and services growth in the final three months of 2013 suggests economic growth outpaced the previous quarter, when GDP expanded 0.8 percent. Economists are optimistic recovery will deepen in 2014. According to the OECD, the UK economy will accelerate 2.4 percent this year.
The Bank of England has indicated it will remain on the sidelines until unemployment reaches 7 percent. The most optimistic forecast show this threshold could be reached by the end of the year.
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